REQUEST FOR PROPOSAL

Request for Proposal (RFP) is the process by which a corporate department
or government agency prepares bid documents to acquire equipment or
services. RFPs are frequently published in the legal documents section of
pertinent newspapers or in trade journals covering the industry in which
the department operates. The RFP can also be distributed to a list of
qualified potential bidders that have already been contacted and
prequalified as eligible by the agency or department.
"Qualified" is a key word in answering or preparing any RFP.
Qualification frequently depends on follow-up investigation on the part of
the hopeful bidder, and careful wording of the original RFP.

RFPs are primarily associated with government agencies, since their
responsibility to get equipment and consulting talent under the most
beneficial circumstances possible is closely monitored by the press and
tax watchdogs. Some private companies also employ RFPs, though, usually
when purchasing commodities or services that do not bear directly on the
company's own products or services.

ELEMENTS OF AN ATTRACTIVE RFP

Some RFP work requests are of a scale beyond the scope of small or
mid-sized companies, but others provide such businesses with valuable
opportunities to expand their client base and operations. Before bidding
on an RFP, however, entrepreneurs and business owners should make sure
they fully understand the nature of the work request.

For instance, some RFPs are decidedly more informative than others. When
scanning an RFP, vendors should make certain that it specifically
describes what needs to be delivered or executed to fulfill the needs of
the company or agency that posted the notice. In order to do so, it is
often necessary for potential vendors to educate themselves about the
nature of the agency or corporation that has submitted the RFP. Vendors
should also inquire whether the work request could translate into
additional work on associated projects down the line. For instance, if the
equipment will eventually be networked to a building that is not yet
built, but is in the long range plans of the agency or company, a vendor
may decide that a low price on the initial RFP is viable if it advances
its prospects for a more long-term arrangement down the line.

Before making any bid, vendors should also check the RFP for other factors
that might influence their response. Some possible questions follow:

Will the asked-for equipment be subject to notable environmental
conditions or regulations?

If the equipment will be used in foreign countries, is the equipment
compatible with the standards of those nations?

Will ancillary costs associated with design, production, transportation,
or some other aspect of delivery eat into the profit margin to an
unacceptable extent?

Are the RFP and the equipment or services it seeks legal under local,
state, and federal laws?

Is the RFP asking for both equipment and service? (Companies that sell
equipment might not be able to adequately service it, yet that service
performance may be written into the RFP in a separate section from the
equipment specifications; responders must know they can fulfill the
entire contract before answering it.)

Are deadlines and performance clauses contained within the RFP
reasonable?

Will the RFP agency require the winning vendor to sign a performance
bond that guarantees delivery of goods or services by a certain date?

Most companies and agencies that submit work requests provide prospective
bidders with ample time to study the RFP before the deadline. Some
companies give vendors as much as one month from the time the RFP is
published before the bids are due. This allows bidders time to tinker with
their bids, possibly allowing them to seek out new vendors of their own to
help meet the needs of the RFP.

STAYING ON THE BID LIST

Companies wishing to bid on RFPs should monitor the legal notices in local
newspapers and trade magazines, and contact the purchasing departments of
corporations and government agencies likely to request services and
equipment. They should investigate the requirements to be added to the
"bid list." Finally, once the company has fulfilled all
obligations necessary to be added to the list, the company's
leadership needs to make certain that it stays on that list.

Government agencies and corporate departments are sometimes reluctant to
delete vendors from bid lists because of fears that such cuts will elicit
favoritism charges. Nonetheless, establishments submitting RFPs do seek to
keep bid lists to manageable size, since every bid requires scrutiny. One
favored way to keep the bid list down is to require potential vendors to
refile every few years. Another is to ask vendors to provide certain
information about their companies, such as past sales and experience or
number of employees available to service the account. Such requirements
cull the number of bidders down, eliminating companies that are too
disorganized or feeble to keep up. Conversely, a small business that meets
all such requirements in a timely fashion is essentially serving notice
that it has its act together.

Companies seeking RFP business should also be cognizant of the fact that
winning bids are not always exclusively a matter of providing the lowest
cost or the highest level of customer service. Some corporations and
government agencies give special consideration on their bid lists to
minority-and women-owned companies.

FURTHER READING:

Harrington, Lisa H. "The RFP Process: How to Hire a Third
Party."
Transportation and Distribution.
September 1998.